by Dr. Monroe Mann, PhD, MBA, Esq
(with a graduate certificate in financial planning from Boston University)
Founder & Executive Director, Break Diving, Inc.
We all know that we should be investing our money.
Many of us don’t know how to do that.
Of those who do, even more of us don’t find the time to do it, or… if we do, we start off strong with great enthusiasm, and then a few weeks or months later, just stop investing because life gets in the way.
Yet still more of us complain, “But I just don’t have enough money to even get started!”
Well, no longer. I found this really cool App (full disclosure: I have no connection with the company) called Acorns. You can find it in the app store. And it’s really quite cool. I found it while playing a game on my phone and one of those really annoying ads popped up. Damn, they snagged me, haha!
Here’s how it works:
a) You link a bank debit card. Yes, it’s safe–I googled “Acorns” and found many legitimate reviews from respectable companies:
b) You answer a few questions and it chooses your investment portfolio.
c) You go about your day as per usual, buying stuff with your debit card. For each purchase, it rounds up to the next dollar, stores that amount, and when the total number of ’round ups’ equal $5, it deducts that $5 from your linked bank account and invests it into your chosen portfolio.
For example, if you buy a coffee for $2.50 today, then $.50 gets added to your round-up counter. Then later, you buy something for $3 even. In this case, $1.00 gets added to your round-up counter. A newspaper for $1.30? Then $.70 gets added to your counter. No money has yet been deducted from your bank account or invested into your Acorns account because the total of round-ups has not yet reached $5.00. This process continues until the counter does reach $5.00, and then–boom–the $5 is then deducted from your bank and invested into your brokerage account with Acorns.
The beauty of this is you set it up once and you never have to worry about whether you have enough to invest or not: it only invests money if you are spending money. In other words, if you stop spending money because the money in your debit account is low, then it will stop rounding up, and it will automatically halt your investments. Once you start using your debit card more frequently, your investments will again automatically become more frequent. And it’s never a huge amount that will keep you from paying your rent or paying your phone bill: just pennies on the dollar! And in an ironic and yet so apropos way, you end up taking advantage of the investment philosophy known as “dollar cost averaging”, which means that you keep investing whether the market today is up or down. The end result is usually a net gain. Acorns takes full advantage of this long-term investment strategy… automatically.
But it gets cooler! You can set it up to have regular deductions too, i.e. $10/month, or (haha, I look forward to this) $100/day! So then you’re investing your regular deduction plus the roundups. In this case, you may need to keep a closer eye on whether you have enough money for the automatic deductions. If you suddenly have a loss of income, it is so simple to switch the amount and frequency–the app is really well designed.
You can also make one-time investments of $10, $25, $100, etc. That’s great if you suddenly run into a bunch of money and want to infuse a little extra cash into your portfolio.
Next, you can link your credit cards too, if you like. In this way, you will end up with more roundups (assuming you are using those credit cards for purchases).
And… it has a really great forecasting tool to give you an idea of how much your portfolio will be worth in the future, and you can set the parameters, i.e. how many years from now, at what interest rate, and with what amount of regular investments.
Finally, there is no penalty or fees for withdrawal. EVER. So if you run into an emergency and suddenly need the money, it’s there for you. But… you have to wait 3 – 7 days for the stock to be sold and for the money to be deposited into your bank account. Not a big deal as far as I’m concerned: we should all have a separate ’emergency savings account’ in liquid cash in the bank anyway for that rainy day; our investment portfolio should not become our rainy day fun except in the most serious of circumstances.
Anyway, doesn’t this sound cool? Best part? You can start investing with Acorns today–accounts are usually set up within 24 hours, if not sooner!
If you use the link below, you will get $5 automatically added to your account (and I think I get $5 too, up to a total of $25): https://acorns.com/invite/7PTGPY
Even if you don’t use that invite link, I really suggest you check out Acorns. You can find it easily in the app stores on your phone and even though it’s only been a few weeks since I’ve been using it, I already am a huge believer. I think once you start using it, you too will start loving it, particularly as you start to see your “Present Account Value” rise from $5 to $10 and then $25 and then $50 and well, you get the idea. I already can see mine at $100,000+ in the years ahead. Ahhh…
Are there some downsides? I only see two so far.
First, until your account hits $500, you have to pay $1/month. Once you hit $500, it’s .25% per year, which is very reasonable (1/4 of 1%). So until you get to $500, you’re paying a high price to use the service when you have such little money in the account. However, as long as you keep on investing, and don’t turn off the RoundUps, and continue to make regular investments, that $1/month fee will quickly disappear.
Second, it doesn’t appear that you can create an IRA investment account through Acorns at this time. In other words, everything will be taxable upon withdrawal. However, I think it’s a small price to pay because of the fact that you will be investing, and regular investing into a non-tax-deferred account is 500 times better than never investing into a tax-deferred account (due to laziness, or lack of information, or whatever). With Acorns, you will be investing virtually every day if you simply continue to use your debit card. And odds are, you won’t even miss that money!
Here’s that link again: https://acorns.com/invite/7PTGPY, or just download the app in your appstore!
And then, share YOUR experience with Acorns in the comment area below! What do you think?
Coaching: Seeking a life, career, business, finance, or time-management coach? Get in touch with Monroe Mann & Break Diving today at firstname.lastname@example.org